Force-Placed Insurance
Insurance purchased by a property owner or lender on behalf of a vendor or tenant who fails to maintain the required coverage, typically at a higher premium that is charged back to the non-compliant party.
Overview
Force-Placed Insurance is a remedy of last resort when a vendor or tenant fails to provide required insurance despite repeated requests. The property owner or lender purchases a policy on the non-compliant party's behalf and charges the premium back to them, often at rates significantly higher than the vendor would pay on the open market.
When It Applies
Force-placement is most common in two scenarios: mortgage lenders requiring property insurance from borrowers, and commercial leases requiring tenants to carry liability coverage. The right to force-place must be explicitly stated in the contract or lease. Without contractual authority, the property manager cannot unilaterally purchase insurance on a vendor's behalf.
Compliance Implications
Force-placement should be the final step in an escalation sequence — not a routine practice. It signals a breakdown in the vendor relationship and adds administrative burden. Effective COI tracking programs rarely need force-placement because proactive expiration alerts and follow-up sequences catch gaps before they reach this stage.
See how Inori handles force-placed insurance
Try our free COI checker first, or start a free trial of the full platform.